(1)A piece of equipment,which was previously recorded by a governmental unit in

Question

(1)A piece of equipment,which was previously recorded by a governmental unit in its general capital assets (GCA) in the government wide statements is contributed to a department whose activities are accounted for in an internal service fund. what entry would normally be made in the GCA to transfer the equipment to the internal service fund?

a) Equipment xxx

Net Asets--Invested in Capital Assets xxx

b) Net Assets--Incested in Capital Assets xxx

Equipment xxx

c) Equipment xxx

Contribution From General Fund xxx

d) Net Assets--Invested in Capital Assets xxx

Accumlated Depreciation, Equipment XXX

Equipment xxx

(2)Which of the following is true for state and local governmental units?

a) Generally accepted accounting principles (GAAP) require that interest be capitalized for all capital projects.

b) GAAP do not permit interest capitalization for any capital projects.

c) GAAP require that interest be capitalized during the construction of general capital assets, but capitalization of interest during time of contruction is optional for proprietary fund fixed assets.

d) GAAP require the capitalization of interest during the construction of fixed assets of proprietary funds, but interest capitalization during the construction of general capital assets is optional

(3)An internal service fund purchased a piece of equipment for cash.Which section of the Statement of Cash Flows would this transaction appear in?

a) Cash Flows from operating Activities.

b) Cash flows from noncapital financing activities

c) Cash flows from capital and related financing activities

d) Cash flows from investing activities.

(4) In general, the same accounting principles that are used by the governmental fund types are also used by:

a) Expendable private purpose trust funds

b) Nonexpendable private purpose trust funds

c) Internal service funds

d) Enterprise funds

(5) Which of the following accounts would not likely be found in statements of enterprise funds?

a)Encumbrances Outstanding

b)Revenue Bonds Payable

c)Contribution from General Fund

d)Operating Transfer from General Fund

(6)Which of the following is not true regarding enterprise funds?

a)Enterprise funds are classified as proprietary funds

b)Enterprise funds use full accrual accounting

c)Enterprise funds are considered "expendable" funds

d)Enterprise funds record depreciation on fixed assets

Explanation / Answer

Ans 1 c Equipment Dr

               Net asset – Invested in Capital Asset Cr

As equipment is transferred from general capital asset so it is debited and Net asset –Invested in capital asset is credited as equipment is received by Internal service department.

Ans 3 d Cash flow from Investing Activities.

Apart from some differences the cash flow statement is quite similar to that of profit entity. So as equipment is purchased so we have invested money into assets so it is an investing activities.

Ans 4 b) Nonexpendabe private purpose fund.

It used the same accounting principle. Asa it is one of the part of governmental fund so same syatem is followed.

Dear student please don’t post multiple questions I have answered 1,3 an 4

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